September 26, 2013

Simple Answers to the Top Five Questions About the Government Shutdown

The word in Washington is that we’re on the brink of a “shutdown,” a dramatic term that suggests the U.S. government will cease operating—as simple as closing your laptop. The reality, of course, is much more complicated. What is a government shutdown, and how on earth could a petty budget disagreement cause it? Here’s an explanation of where shutdowns came from and how they’ve played out in the past—plus what’s likely to happen this time around.

What’s a “continuing resolution,” and what does it have to do with shutdowns?

The Constitution declares, "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law." This means that, in order for almost any program run by the government to receive its funding, Congress has to pass twelve annual appropriations bills before the start of the fiscal year on October 1. This almost never happens—Congress has met the deadline only four times since 1953. But since the late 1800s, we’ve had a solution for the lack of a comprehensive budget: the continuing resolution.

Continuing resolutions have ranged in scope and duration. One CR could cover the whole budget for the remainder of a fiscal year; in the ‘70s and ‘80s they ballooned to include “substantive legislation,” which posed its own set of problems. More recently, they’ve shrunk, covering shorter and shorter amounts of time. Take fiscal year 1996: Congress debated 14 separate resolutions and wound up with a funding gap—a period of time when the government had no legal justification for spending its money—and two separate government shutdowns: five days in November 1995 and 21 in December and January. The Government Accountability Office laid out in a 2013 report the number and duration of continuing resolutions since 1999:

So why are there so many continuing resolutions these days, with so little staying power? In part it’s because they effectively function as stopgap measures to continue funding for periods of each fiscal year while Congress continues to debate the budget. Rather than procedural formalities, they're now opportunities for threats. The more CR deadlines there are, the more opportunities for brinkmanship to arise—if Congress doesn't make a certain cut pushed by a certain party, then the whole government comes to a pause. This is the new normal, and even though it creates serious uncertainty for government agencies’ funding, this funding gap and short resolution system isn’t going anywhere anytime soon—and so neither will the threat of shutdowns.

What were the effects of previous government shutdowns?

This isn’t the first time we’ve faced this problem. The government has shut down a total of 17 times—sometimes for just a day, sometimes for weeks—since 1976, when congressional budgeting rules changed.

The last shutdown, from December 15, 1995, until January 6, 1996, is also the longest in U.S. history. It had more palpable effects. In late 1995, the Clinton administration and the Republican opposition, led by House Speaker Newt Gingrich, sparred over balancing the government’s budget. Clinton was open to a long-term balancing plan but threatened to veto any further cuts. Gingrich did not yield and sent back a resolution that Clinton shot down—resulting in a three-week shutdown which kept 800,000 government employees at home, and forced others to work without pay (they were later paid retroactively). According to a Congressional Research Service report, the National Institutes of Health couldn’t take in new patients; bankruptcy cases got put on hold; 368 national parks closed; passports were not issued; the Bureau of Indian Affairs shut its doors; veterans’ services came to a halt. The shutdown proved hugely unpopular. Gingrich bore most of the blame, perhaps because he said he’d made negotiations more difficult after the president made him get off Air Force One from the back.

This time around, though, polls show that Americans would blame both Democrats and Republicans for the shutdown. There’s not a huge amount of political capital to be gained or lost in either direction, despite what Ted Cruz seems to believe.

Why would a shutdown in 2013 be any different?

This shutdown would differ from previous years because 2013 funding levels are skewed by the mid-year sequester, which lowered the cap on appropriations spending (the amount that Congress can allot to agencies). Originally, fiscal year 2013 had a $1.043 trillion budget, approved in September by Congress for a six-month period. But when the sequester went into effect on March 1, it left a total limit of $988 billion for the remainder of the year.

On March 26, Obama approved a $984 billion resolution to fund the rest of the year at post-sequestration levels, largely to avoid a repeat of the 2011 near-shutdown. This didn’t fully comply with sequester cuts, though: Since it happened midway through the fiscal year, the budget allocation didn’t reduce funding to the extent that a full-year sequester, which reduced the budget to $967 billion for fiscal year 2014, would have.

But the House and Senate aren’t even dealing yet with the deeper cuts imposed by sequestration. What’s on the table now is a short-term resolution that will last, at the latest, until December 15. If, by January 1, Congress hasn’t come up with a way to comply fully with sequestration cuts and continues funding at current CR levels, a second sequester will go into effect and require further cuts, possibly from defense or from “entitlement” programs like Social Security and Medicare, which aren’t seriously affected by the sequester.

And that’s assuming Congress does come to some agreement on the budget and avoids a shutdown. Which, with the September 30 deadline looming and debate at an impasse, seems unlikely.

What can be done to avoid a shutdown?

On September 20, the House approved an extension of the current CR that would fund the government at 2013 levels through the rest of the year—a $986 billion budget. But there’s one small detail that gives this CR nearly no hope of moving through the Senate: It repeals the Affordable Care Act. Senate Majority Leader Harry Reid vowed on Monday not to bend to “Tea Party anarchists” who insist on this point.

But time is running out. With a midnight deadline on Monday, September 30, looming, the question is whether the three days that remain will leave the Senate enough time to send a new resolution back to the House—and whether the House will approve it from there.

What does a shutdown really look like?

Each federal agency has to determine which of its functions are essential and thus exempt from the shutdown. Agencies haven’t revealed anything yet, but they did make contingency plans in 2011 that provide a good—and complicated—outline.

In short: The Office of Management and Budget (OMB) defines essential employees as the people and groups “providing for the national security, including the conduct of foreign relations essential to the national security or the safety of life and property.” Employees who ensure that safety can stay on throughout the shutdown.

As Wonkblog’s Brad Plumer outlined nicely in a Tuesday post, some institutions will certainly not stop for a shutdown. The military, border patrol, and air traffic control will continue to function, probably without pay, until the government starts up again. Jails and hospitals will remain open. So, for the most part, will federal courts. Emergency management, like the present Colorado flood relief, will go forward. The lights will stay on. The mail will still go through (since it’s not funded by the Treasury). Peace Corps volunteers will likely stay abroad. Checks for entitlement programs like Social Security, Medicare, and Medicaid will stay on schedule, at least for a few weeks, after which point they’ll be delayed. Taxes will still be collected. And much to Ted Cruz’s dismay, Obamacare will keep chugging along—although the websites that would explain it might not go up, noted Bill Hoagland of the Bipartisan Policy Center.

When the government shut down in 1995, the OMB estimated the cost at $1.4 billion. National parks, museums, and monuments closed. Passports weren’t issued. Federal contractors halted billions of dollars of work. This time around, every employee of the government not deemed essential (1.2 million out of 2 million, as of 2011) would stop coming to work, in agencies from the National Oceanic and Atmospheric Administration to the Small Business Association. 94 percent of the Department of Education would likely close, for example, along with the entire Nuclear Waste Technical Review Board.

Isabel Sawhill, a budget expert at the Brookings Institution, says that these examples don’t fully explain the effects of a long-term shutdown. For example, there’d be a backlog on “grants to state and local governments, rules that need to be approved, changes of address that need to be made, cases that need to be resolved.” This isn’t problematic in the short-term, but one day projects like NIH research could be jeopardized. “A lot of money flows from the federal government to the state to nonprofits to contractors,” she said. “Eventually that affects citizens. But not right away.”

The Bipartisan Policy Center’s Bill Hoagland cited similar instances. “One that always bothers me coming up to flu season is the CDC,” he said. The agency’s research would probably be put on hold for the duration of a shutdown. Other possibilities: Government websites might stop getting updated and maintained. The federal government likely couldn’t alter construction contracts, he said, and he speculated that wildland fires could even be left burning if they didn’t pose a threat to life or property.

In all likelihood, though, the shutdown wouldn’t last so long that citizens would feel its secondary effects. It’d be a hassle, and making up for backlog would be costly, and then it would be over, the public left frustrated that all this happened over healthcare.